The overall cost of credit for manufacturers in the Midlands has remained largely unchanged over the past two months, but there signs that supply problems are starting to moderate for bigger firms.

According to a new survey published by EEF, there has been little in the way of significant change in the lending environment for manufacturers.

Over the past two months around three in ten companies reported an increase in the overall cost of credit, virtually unchanged now for three consecutive quarters.

The survey indicates a modest improvement in the supply of credit and the availability of new lines of borrowing, but this trend has been concentrated primarily among medium and large companies, with some small firms still facing constraints in accessing finance.

EEF Midlands director Martin Wassell said: “The recession and the crisis in financial markets have worsened the costs and conditions attached to accessing finance and the credit markets for many businesses.

“Despite the pick up in the economy, too few companies are seeing a significant improvement in lending conditions.

“This was never likely to be a swift or easy process, but we are concerned that the rise in the cost of new borrowing may be signalling that the supply of finance is not able to keep up the upturn in manufacturing activity.

“As banks rebuild their balance sheets and take a more cautious approach to risk given the uncertainty surrounding the recovery we are not likely to see much movement in these indicators in the short term.

“The fact that government has chosen to tackle this issue as an early priority is to be welcomed.”